Canadians are seriously worried about how they’re going to pay for holiday shopping this year. A new study by Bank of Montreal (TSX:BMO) found that 78% of Canadians plan to buy fewer gifts this holiday season, with 45% stating they’ll at least be spending less money on gifts.
The pressure is mounting as 51% of Canadians already stated they were feeling financial anxiety as the holidays approach. Moreover, the average Canadian believed it would take three months to pay back their holiday bills, with a quarter not confident they could pay their bills on time.
So, let’s ease that stress, shall we? The holidays are a time of giving, but not giving yourself more anxiety. Here are five steps to help.
Spend what you have
This is huge. If you’re worried about spending money on presents and fear you’ll go into debt on your credit cards, then don’t. Canadians should be budgeting their spending based on what they have in their accounts, not based on what they believe they’ll have down the line.
Nothing is certain, and you certainly should not be putting yourself into debt for gifts. Imagine if you learned your gifts cost someone their anxiety — not very holidayesque, is it?
One of the best places to search for presents is online, true. But check out online marketplaces that offer secondhand options! Honestly, I’ve especially done this year after year for my own kids, who still don’t know the difference between a doll found in-store or online.
What’s more, you can usually find gently used products that are better quality for a lower price. So, if you’re looking for a specific item, start searching now in time for the holidays to grab it before someone else does.
That leads to my next point. Plan ahead about what you are willing to purchase and what you’re not. Don’t go to the mall hoping to find something for your friends, colleagues, and family. Instead, plan out exactly what you’re going to buy. That way, you can keep the spending to a minimum, plus make sure you’re not making impulse purchases.
Stick to your budget
You have a budget for a reason. Ideally, in the future, you can start putting cash aside for the holidays so that you don’t create this anxiety in the future. But that’s the future. Right now, look at your budget and see what you can cut for now to help create cash for holiday spending.
Then stick to it. Do not go over and create more debt, as discussed earlier. The holidays don’t have to be about giving the best and the biggest gift. If you run out of cash, consider free items such as their favourite cookies, or suggest going for a massage together, which is often covered by insurance! There are many creative ways to give a gift that won’t cut into your budget long term.
Consider your investments
Another option if you’re really fearful is to sell off some of your stocks for returns or to use the dividend income collected from your investments. This is ideal right now if it’s from your Tax-Free Savings Account (TFSA). You can take it out now and have an updated contribution limit for the new year. Morever, you can take it out from the TFSA without being penalized!
A great option if you have it is a stock like Canadian Pacific Kansas City (TSX:CP). CP stock has made superb gains over the last few years as well as some strong dividend income to boot. If you purchased it five years ago and haven’t touched it, $1,000 then would have increased by 124%. That would mean that $1,000 is worth $2,266.67 for returns of $1,266.67 without dividend income. That can certainly help during the holidays.